Smiths News Share Discussion Threads

[lord gnome] 02/11/2022 09:33

By the way.... tried a dummy sell this morning and I was offered 37.28p. The stock is well bid.

[lord gnome] 02/11/2022 09:32

I take the view that the company is now a totally different investment case than it was in 2018. Major problems - apart from a source of growth - now appear to be behind it. The balance sheet has been sorted, most debts have been paid off, the company is throwing off large amounts of cash and can afford to pay huge dividends and it is still on a shockingly low forward PE ratio. It might stick at 40p until results, but I can see a major jump once results confirm the transformation. I still harbour hopes of 60p within 12 months.

[lord gnome] 01/11/2022 16:10

Still moving north strongly as we run up to results. Hopefully, you will get your 50p+ this month, privileged.

[privileged] 27/10/2022 14:52

I won't be slicing any until the share price starts with a 5 (and is double digit)

[edmundshaw] 27/10/2022 13:09

I sliced a few today on the rise to go from very heavily overweight to slightly less heavily overweight. Still very bullish here, but trying to balance the portfolio just a little!!

The link is a quick description of the stock. However, I personally don't divide my shares into "income" and "growth". I prefer to consider the total return (if I want income from a "growth" share I top slice capital gains; if I don't want income from an "income" share I reinvest the dividends somewhere).

For me the expected total return here is superb, and the income levels will probably cause a rerating and create a large capital gain anyway!

[norbert colon] 26/10/2022 18:32

https://youtu.be/n3uxnwNWqyMFrom 58mins onwards.

[2breakout] 26/10/2022 18:31

More good buying here………….

[edmundshaw] 25/10/2022 16:16

...and did you get some impressions you can share here?

[davidosh] 25/10/2022 15:00

Smiths News were featured on the Mello Monday show last night

[fft] 20/10/2022 11:07

Also worth pointing out that the subletting is paying more than 50% of the complete cost of the warehouses. That's what I recall anyway. Maybe higher ?Revenue on that is 100% margin ! SNWS don't use or need the warehouses when they are being sublet, so it is pure gain.Caraboa (the drinks operation) is now being rolled out country wide. I think we had a discussion below about this and the impact it could have. What I would like to see is more deals like this. I see them as lower revenue, but higher margin than papers - let's see if that is quantified in any conf call. I see it as perfectly reasonable for SNWS to maintain the profit, using further distribution deals, whilst revenue (papers, magazines) is in a slow decline.

[profdoc] 20/10/2022 10:50

"Earnings are shrivelling" Marktime? Take a look at the past eight years of earnings on the newspaper and magazine business (ignore the businesses now disposed of). Not much of a shrivel. Declining revenue does not mean disappearing earnings.

[privileged] 19/10/2022 21:38

Marktime you forget about the actual valuation of the shares at a 3.5x PE ratio and debt freeThis prices in way way worse than 5% p.a. . It basically priced in near 100% decline from 2026 onwards

[marktime1231] 19/10/2022 19:43

Thanks and well done for looking back over the contract histories. So those two renewals were at revenue decline rates of 2.5% pa and 5% pa respectively, before discounting for the effects of inflation. Can't imagine the millions in lost revenue, or the profit on it, is replaced by sub-letting warehouse space etc. If it is then SNWS is in the wrong core business! No wonder the share price is on such a low p/e when earnings are shrivelling.

[tole] 19/10/2022 18:22

https://masterinvestor.co.uk/equities/small-cap-round-up-internet-broking-sites-and-drilling/Smiths News (LON:SNWS) – delivering its own newsAhead of this newspaper and magazine distribution business announcing its finals on Wednesday 9 November, the company noted on Monday that it had concluded two renewals.With Frontline and Seymour, magazine distributors, the group has secured distribution through to 2030, worth some £180m annually.CEO Jon Bunting stated that:"We are delighted to confirm this new agreement with both Frontline and Seymour. Long term partnerships with publishers and distributors are central to our business model and allow us to continue to drive efficiencies and deliver great service for publishers, retailers, and ultimately for millions of consumers across the UK."The group's shares, which were 41p a year ago, have subsequently been down to 27p, before picking up to 34p this week on the back of the renewal news.Hopefully the current firmness can be continued through November and onwards.

[norbert colon] 19/10/2022 15:40

Yes agree profdoc thanks for the clarification - all contributions welcome especially as you first brought this to my attention as an interesting investment proposition.


It’s been a bit of a slog for long term investors but I’m struggling to see much downside now given the falling debt position and cash generation despite the poor macro outlook generally.

[profdoc] 19/10/2022 15:10

Sorry to be pendantic Norbert, but I'd say pretty well 100% market share in those postcodes it concentrates on (i.e. 55% of postcodes) - no point in having two lots of vans passing each other on country roads and town streets.
Thank you for your contributions to the board.

[privileged] 19/10/2022 15:08

Thanks. Well even 55% market share leaves some small room but yes as you say I feel even 50p cheap on that metric for a debt free 12%odd divi yield. I would like to think 60p very possible on this

[norbert colon] 19/10/2022 14:29

Yes you are correct that sales through to 2024/25 are already in the bag at the quantum stated in the previous contract wins.


SNWS has 55% UK market share - I’m not 100% sure but I’m not aware that there are a myriad of other potential contracts they can win whether via competitors or otherwise.


One other point on valuation that I’ve referred to before is that Menzies was acquired for 3 x OP so on this simple metric it would value SNWS at GBP 120m or 50p share so whichever way you look at it ie DCF, PE etc it’s just dirt cheap.

[privileged] 19/10/2022 13:53

Thanks, v helpfulI come back to PE of around 3.5 effectively only valuing this until late 2025 anyway so any contract even comparable to previous makes valuation look cheap still at these levels before any other business streams they could replace with or other suppliersAny views what their market share is and any other competitors they could outbid for future contracts ?

[norbert colon] 19/10/2022 12:42

I've just back tracked over prior contract renewals to refresh my memory on where we stand with the others and the summary is:News UK deal runs out in July 2024 and was valued at GBP 200m pa Reach deal runs out in Sep 2024 and was valued at GBP 220m paMarketforce deal runs out in 2025 and was valued at GBP 130mLastly Telegraph deal runs out in Sep 2024 and was valued at GBP 100MCover prices have risen over this time (since 2018/19)Interesting to note that the Associated News ans Seymour/Frontline deals ran until 2025 but have been renewed already 2029/30.

[norbert colon] 19/10/2022 12:34

Mgt forecast approx 5% sales decline per annum iirc and this tallies approx with f/c in the market. Don't forget mgt are adding profit streams under this top line decline ie subletting of warehouse space etc. Still very much all about how they can juice their assets and distribution network.

[marktime1231] 19/10/2022 11:27

If those two contracts represent 35% of the business that implies a base revenue decline of 2-3% pa over the period even before discounting for inflation?

[this_is_me] 19/10/2022 08:33

Long term contract renewals, P/E less than 4 and big dividend.